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Chicago, IL – March 30, 2023 – Zacks Director of Research Sheraz Mian says, "For 2023 Q1, S&P 500 earnings are expected to decline -9.7% from the same period last year on +1.8% higher revenues."
Analyzing the Evolving Q1 Earnings Landscape
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Total S&P 500 earnings for 2023 Q1 are expected to be down -9.7% from the same period last year on +1.8% higher revenues. This would follow the -5.4% decline in the preceding period’s earnings (2022 Q4) on +5.9% higher revenues.
In terms of growth, 2023 Q1 earnings are expected to be below the year-earlier level for 10 of the 16 Zacks sectors, with Basic Materials (-39.4% decline), Construction (-31.9%), Medical (-22.6%), Conglomerates (-23.8%), Autos (-16.1%), Technology (-17.6%), and Consumer Staples (-8.9%) having notable declines.
Sectors enjoying positive earnings growth in 2023 Q1 include Transportation (+54.9%), Aerospace (+15.0%), Energy (+5.5%), Finance (+2.3%), Industrial Products (+0.8%), and Consumer Discretionary (+17.8%).
Earnings estimates for full-year 2023 have been coming down as well. From their peak in mid-April 2022, the aggregate total for the year has been cut by -12.5% for the index as a whole and -14.3% when excluding the Energy sector’s contribution.
For 2023 Q1, S&P 500 earnings are expected to decline -9.7% from the same period last year on +1.8% higher revenues.
As has been the case in recent quarters, estimates for 2023 Q1 have been steadily coming down.
Please note that the magnitude of cuts to Q1 estimates is relatively modest compared to what we saw in the comparable periods for the last few quarters. That said, estimates have come down across the board for most sectors.
The Finance sector, which dominates the initial phase of each reporting cycle, enjoyed modest upward revisions to estimates in the first two months of the quarter. However, estimates started to come down as the regional banking crisis took hold following the Silicon Valley Bank episode.
The Finance sector as a whole is expected to show +2.3% earnings growth in Q1 on +7% higher revenues, which would follow the -17.1% earnings decline on +3.7% higher revenues in 2022 Q4.
The Major Banks industry, which includes JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) , that will kick-start the Q1 reporting cycle for the group on April 14th, is expected to bring in +5.1% more earnings in the period on +13.5% higher revenues.
The big money-center banks like JPMorgan and Citigroup will enjoy strong net-interest income growth as a result of growing loan portfolios and expanded margins. But those gains will mostly get offset by weakness in investment banking and other fee activities. Credit quality still remains favorable by historical standards, though delinquencies are bound to increase as the economic cycle turns down. Some of that will show up in provisions for loan losses in these quarterly reports, as we did in the preceding quarterly reporting cycle.
The Earnings Big Picture
As noted earlier, the current aggregate earnings total for the index approximates to an index ‘EPS’ of $214.70, down from $242.98 in mid-April, 2022.
The chart below tracks these index ‘EPS’ values since the start of 2022. Please note that these ‘EPS’ values are imputed approximations and have been previously published on the dates listed As mentioned earlier, 2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps we see a bit more downward adjustments to estimates over the coming weeks, after more companies report quarterly results and provide guidance. But we have nevertheless already covered some ground in taking estimates to a fair or appropriate level.
This is particularly so if whatever economic downturn lies ahead proves to be more of the garden variety rather than the last two such events. Recency bias forces us to use the last two economic downturns, which were also among the nastiest in recent history, as our reference points. But we need to be cautious against that natural tendency as the economy’s foundations at present remain unusually strong.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: JPMorgan, Citigroup
For Immediate Release
Chicago, IL – March 30, 2023 – Zacks Director of Research Sheraz Mian says, "For 2023 Q1, S&P 500 earnings are expected to decline -9.7% from the same period last year on +1.8% higher revenues."
Analyzing the Evolving Q1 Earnings Landscape
Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
For 2023 Q1, S&P 500 earnings are expected to decline -9.7% from the same period last year on +1.8% higher revenues.
As has been the case in recent quarters, estimates for 2023 Q1 have been steadily coming down.
Please note that the magnitude of cuts to Q1 estimates is relatively modest compared to what we saw in the comparable periods for the last few quarters. That said, estimates have come down across the board for most sectors.
The Finance sector, which dominates the initial phase of each reporting cycle, enjoyed modest upward revisions to estimates in the first two months of the quarter. However, estimates started to come down as the regional banking crisis took hold following the Silicon Valley Bank episode.
The Finance sector as a whole is expected to show +2.3% earnings growth in Q1 on +7% higher revenues, which would follow the -17.1% earnings decline on +3.7% higher revenues in 2022 Q4.
The Major Banks industry, which includes JPMorgan (JPM - Free Report) and Citigroup (C - Free Report) , that will kick-start the Q1 reporting cycle for the group on April 14th, is expected to bring in +5.1% more earnings in the period on +13.5% higher revenues.
The big money-center banks like JPMorgan and Citigroup will enjoy strong net-interest income growth as a result of growing loan portfolios and expanded margins. But those gains will mostly get offset by weakness in investment banking and other fee activities. Credit quality still remains favorable by historical standards, though delinquencies are bound to increase as the economic cycle turns down. Some of that will show up in provisions for loan losses in these quarterly reports, as we did in the preceding quarterly reporting cycle.
The Earnings Big Picture
As noted earlier, the current aggregate earnings total for the index approximates to an index ‘EPS’ of $214.70, down from $242.98 in mid-April, 2022.
The chart below tracks these index ‘EPS’ values since the start of 2022. Please note that these ‘EPS’ values are imputed approximations and have been previously published on the dates listed
As mentioned earlier, 2023 aggregate earnings estimates on an ex-Energy basis are already down by more than -14% since mid-April 2022. Perhaps we see a bit more downward adjustments to estimates over the coming weeks, after more companies report quarterly results and provide guidance. But we have nevertheless already covered some ground in taking estimates to a fair or appropriate level.
This is particularly so if whatever economic downturn lies ahead proves to be more of the garden variety rather than the last two such events. Recency bias forces us to use the last two economic downturns, which were also among the nastiest in recent history, as our reference points. But we need to be cautious against that natural tendency as the economy’s foundations at present remain unusually strong.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.